Rare Regulatory Triple Play Means Good Things for Energy Customers Coast to Coast
IREC is involved in over a dozen simultaneous regulatory proceedings across the country at any given moment. Yet, rare it is when three state regulatory milestones occur within the same week.
In an unexpected occurrence of regulatory synchronicity, the commissions of California, South Carolina and Maryland all hit the streets in the same week with some pretty big (and long-awaited) steps forward for consumer oriented clean energy. What’s more, IREC was thrilled to see clearly reflected in all of them the adoption of several IREC recommendations, all of which make it easier and more affordable for more consumers to access and benefit from clean energy.
Triple Play Big Takeaways
California Adopts Small Scale Solar + Storage Methodology
An April 28th Order issued by the California Public Utilities Commission (CPUC) further cleared the path for customer-sited distributed energy storage systems paired with solar PV (a.k.a “solar+storage systems”). Fundamentally, solar+storage customers are quite different than the typical rooftop solar customer. While both customers are connected to the grid and both receive net energy metering (NEM) credits for excess electricity they provide to the grid, one has the ability to store electricity. As such, NEM solar+storage systems require different rules to ensure that the NEM credits they receive are only granted for electricity generated by renewable energy sources.
In addition, the rules must be structured to prevent customers from using non-renewable grid electricity at a cheaper rate at certain time periods to charge their storage system and then receive bill credits for discharging electricity into the grid at a higher rate during another time period (a.k.a. rate arbitrage).
With this order, the CPUC set forth a methodology to determine how to appropriately and fairly estimate the NEM credits that solar+storage customers could receive. The commission adopted the methodology IREC proposed, which has the effect of encouraging customers to use their storage devices to store solar energy mid-day when solar production peaks, and dispatch that clean energy for export to the grid later in the day, without forcing a customer to forfeit hourly NEM credits. The adopted methodology is more simple and cost-effective than the other method under consideration, which would have relied on an hourly generation profile estimation.
As a growing number of customers in California (and other states) adopt solar+storage systems, there remains an increasingly urgent need to resolve some fundamental regulatory questions to enable deployment of storage in a manner that is fair to all ratepayers, encouraging the use of these systems such that they provide optimal benefits to the grid and energy storage adopters.
As the CPUC order importantly points out, solar+storage systems can provide a broad range of benefits to host customers and the utility grid, including, but not limited to, “supplying back-up power during grid outages, reducing a customer’s peak demand, shifting a customer’s electricity needs to align with grid supply, reducing a customer’s total energy purchases, and supplying reliability services to the grid.” (D. 16-04-020 Order at 5). In order to capture this array of benefits and support a solid platform for continued investments and growth, additional regulatory clarity is warranted. As California and other states continue to examine energy storage, IREC looks forward to continuing to work collaboratively with all stakeholders to identify and implement storage solutions.
South Carolina Adopts Vastly Improved Interconnection Rules
On the other side of the continent, the South Carolina Commission adopted much improved interconnection standards that apply to both small-scale and large-scale renewable energy generators. South Carolina has received an ‘F’ grade in the Freeing the Grid report for interconnection each year for the past decade. Yet, with recent improvements to other renewable energy policies, the Palmetto State recognized the need to take a closer look at the processes and protocols relating to the grid.
As an active participant throughout numerous stakeholder meetings, comments and negotiations, IREC was pleased to see several of our recommended best practices adopted, including a pre-application report process, an expedited review process for projects up to 20 kW, a process to allow projects that need interconnection facilities studies or upgrades to still proceed through Fast Track, and a simplified and clearly defined two-tier study process.
These improvements will make the process of connecting to the grid more straightforward for all South Carolina interconnection customers, while also minimizing the time and cost on the part of utilities and developers to process interconnection applications. Nonetheless, we felt there was substantial evidence on the record to support additional improvements, including the adoption of greater size limits for Fast Track review, the adoption of a Supplemental Review process with a 100% of minimum load screen and more explicit and transparent utility reporting requirements.
As penetration levels increase, the lack of good utility reporting requirements as well as the constraints on the Fast Track process will likely result in slower processes and more frustrations by all parties involved (with interconnection customers bearing the brunt of the headaches and costs). Nonetheless, we’re pleased to see another southeast state move ahead with the adoption of vastly improved interconnection standards, and we hope to see other states in the region soon follow suit.
Maryland Makes Strides Toward New Shared Solar Program
Maryland is one step closer to joining more than a dozen other leading states in offering a new statewide shared solar program for the benefit of all customers. After nearly a year since the passage of HB 1057 in May 2015, which mandated the creation of a Community Solar Energy Generating System (CSEGS) program, draft rules on the CSEGS program were issued on Friday, April 29.
The draft rules, which are open for public comment until May 30, largely comport with IREC’s Model Rules for Shared Renewable Programs and envision a fairly balanced and widely available program. Importantly, the draft rules include low- to moderate-income (LMI) components that reflect the increasing focus by policymakers, regulators and other stakeholders to more meaningfully bring solar opportunities to that largely underserved market segment. IREC’s recently issued Shared Renewable Energy For Low-to Moderate Income Consumers: Policy Guidelines and Model Provisions responds to this same trend and offers a useful point of comparison by which to evaluate Maryland’s draft rules.
Over the past year, IREC actively engaged in a collaborative working group process, led by Maryland Public Service Commission staff, to develop proposed draft rules for commission consideration. The draft rules issued Friday reflect that extensive, informal stakeholder input, as well as additional changes resulting from the formal comment and hearing process at the commission. Highlights of the new program are available here.
Just as we gear up for the long-awaited baseball season finally upon us, IREC continues our critical regulatory work in dozens of states, looking forward to more regulatory wins and more crowd-pleasing triple plays and home runs to come.